Specialization in outsourcing

April 9, 2010

Specialization or the theory of comparative costis the main reason for the continued relevance of outsourcing. Of course the recent telecommunications revolution and the fall in the rates of communication and data transfer played their part. This is the reason why outsourcing works best for the service industry-where there is no physical product that needs relocating.

As costs of outsourcing rise in growing and maturing economies like India the venue may change , but outsourcing will always happen for there will always be regions which will perform certain functions at an advantageous cost to the outsourcer. As newer destinations are discovered for the more traditional forms of outsourcing increasingly countries like Indiaand China will move up the value chain and offer services that require a greater degree of sophistication and specialist skill. For instance things like debt collection, content creation for media, business analysis, claims processing on behalf of insurance firms and so on are increasingly being outsourced to Indian firms.

Outsourcers in the US have now reached a stage where they pay far more attention to the quality and appropriateness of their vendors, than they did in the past. The era of Indians trying to pass of as true blue American has nearly ended, with outsourcers realizing that if they do not want their customers to mutiny due to daily run ins with overseas customer service agents, they would have to use the services of people like the Canadians who are much closer culturally. Or the fact that the Hispanic customers could be served wonderfully well by outsourcing business to Latin American countries.

Another aspect of outsourcing which is very interesting and shows us how deeply entrenched outsourcing is in today’s time thanks to the advancement in telecommunication technology is the trend of person to person offshoring, which is outsourcing at a micro level where an individual seeks to hire the best at the lowest price globally. The areas covered in this are many-Transcription and other Administrative Support Services, Software Coding and Other IT Services, Website Creation and Maintenance Services, Marketing and Sales Support Services, Ancillary and Concierge Services, Online Tutoring Services, Accounting, Finance and Tax Preparation Services, Home Design and Related Services, Editorial and Writing Services, and Graphic Design Services.

Come to think of it outsourcing is as old as the barter system. After all it makes sense for everyone to do what they are best at, or very clever at, so that there is all across efficiency and one can then exchange the goods and services to the advantage of everyone concerned. In the past, the quest for trade led to the discovery of whole continents, and new products and services which changed the shape and nature of the world for all times to come. The communications revolution has been no less seismic and today when distances have shrunk and the world has in many ways truly become a global village, the debate about the future of outsourcing is redundant. It will always be there. Like it always has

Comments

4 Responses to “Specialization in outsourcing”

sam on
April 12th, 2010 5:22 am

Offshoring had become a controversial topic during the American Presidential elections. The roots of the debate sprang from the disparaging increase of jobs in the US in spite of economic revival. Proponents of offshoring derived their point of view from the theory of comparative advantage. They said that it was in America’s best interest to take advantage of low cost, trained labour in countries like India. Studies showed that the net advantage of offshoring was larger to the US and that it helped create rather than wipe out jobs in the parent country.

Brian on
April 14th, 2010 12:34 am

Interesting to know that person to person outsourcing is a growing trend. This is also true for single person companies that need specific help on various jobs.